Business Hints for Men and Women
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Alfred Rochefort Calhoun >> Business Hints for Men and Women
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This was particularly the case with our Government during the
trying days of our Civil War.
States entering on great public works, for the benefit of the
commonwealth, frequently cannot raise the necessary money by the
usual forms of taxation.
In these cases loans have to be made, that is the Government and
the state go out and borrow from those who have it to spare, the
necessary money.
The Government, the state, and it may be the city or county, gives
to the party providing the money what is known as bond or bonds,
each of a fixed amount and bearing a fixed rate of interest,
payable as a rule semi-annually.
PERSONAL PROPERTY
There is no form of property so easy to assess for the purpose of
taxation as real estate, that is the land and the buildings, for
the last selling value of this property is a matter of public
record, and then the assessors, who should be men of honesty and
good judgment, are generally posted as to the value of the
property under consideration.
When, however, it comes to the taxation of personal property,
which means any kind of property that can be detached and carried
about, it is a different matter.
Just as many people, otherwise regarded as honest, do not think it
a great wrong to get the better of the Custom House, so many
reputable people are inclined to revolt against the tax on
personal property and to conceal their actual possessions from the
assessor, nor is this peculiarity confined to the poor.
Any man may be legally compelled to swear to the accuracy of his
statement, and if it is found that he has knowingly sworn to a
false statement, he may be brought to task for perjury.
What is known as "personal property" varies in many of the states.
Personal property generally includes, merchandise in possession;
all fixtures, all furniture in home, offices, and factories; all
live stock, all money on hand and in banks; other men's notes, not
transferred; all stocks and bonds and other forms of security.
TOWN TAXES
Townships or counties, if properly authorized by charter or the
votes of the people, may levy special taxes for special purposes
within the limits of their own jurisdictions, or they may in the
same way sell bonds to carry out some work that has been decided
on for the common weal.
Two or more towns, or counties, may join in the same way to carry
out a project of benefit to both, provided that the burden of the
undertaking be equitably assessed.
PAYMENTS
All tax bills are due and collectable on presentation, but this is
never enforced.
A time is, however, fixed beyond which payment cannot be deferred.
A sufficient amount of any property may be sold at auction to
satisfy a tax bill.
Of old, and still in some places, the road taxes were paid in
cash, but more frequently by work on the roads, either by the
individual man, or in connection with his team, each day's work of
one or both being fixed at a regular rate.
TAXING CORPORATIONS
The state does not tax the individual members of a corporation for
property held in common. The same result is secured better by
taxing the corporation as a body. This applies to banks,
railroads, and incorporated manufacturing establishments.
Savings banks are taxed lightly. Every depositor is liable for a
personal property tax proportioned to the amount of his credit.
To make collection easy the savings bank always pays the amount of
this tax in bulk, and then charges it to the expense account of
the establishment, so that indirectly the depositors pay after
all, as their dividends are reduced by just the amount of the tax.
TAXES IN GENERAL
When a man owns property in different towns, counties, or states,
he is regarded as so many individuals, and must pay each as the
local demands require. No matter where a man's personal property
is placed, the rule is to tax him for the whole at the place of
his usual residence.
The landlord and the merchant each pays a direct tax to the
collector, but it would be a business error to think that in so
doing either or both is carrying more than his share of the total
taxation.
The landlord keeps in mind the added expense when he comes to
adjust leases with his tenants. The merchant, who pays taxes on
his stock and so adds to his expense account, should not be blamed
if he keeps this in mind when he fixes the selling prices of his
goods.
THE RETURNS
Taxes duly paid, honestly collected, and properly expended should
never be regarded as a burden.
From no equal expenditure of money do the people get so much good.
The public schools, the public highways, the protection of life
and property, public hospitals, public libraries, residences for
the old, the blind, the orphaned and the insane, as well as secure
places for the lawless, are built and maintained by the taxpayer.
As a rule all these things are done honestly and well,
notwithstanding the outcry to the contrary.
If there be dishonesty in places, it is the fault quite as much of
the voter who selected him as of the official culprit himself.
We must take all the responsibility of our agents, whether they be
public or private.
Every good citizen should feel that his public duty is an
important private business.
CHAPTER XVIII
CONTRACTS, LEASES, AND GUARANTEES
The law books define a contract to be "An agreement between two or
more persons to do or not to do a certain stated thing or things,
for a consideration."
The consideration is a vital part of every contract.
There can be no binding contract without a consideration.
The other requisites of a contract are--
1. It must be possible of accomplishment.
2. It must be in accordance with law.
3. Its performance must not injure the public.
4. The parties to a contract must be competent to do the things to
which they pledge themselves.
5. A drunken or an insane man cannot make a contract.
6. All parties to a contract must be agreed.
THE CONSIDERATION
No contract can be held as binding where the consideration is not
named.
A promise, verbal or in writing, to do something for a certain
party, cannot be enforced.
A promise to do the same thing for a stipulation named is a
contract and may be enforced.
A gift is not a form of contract. Once made it cannot be legally
taken back.
WRITTEN AND VERBAL CONTRACTS
There are certain forms of contract which cannot be legally
enforced, unless they are in writing.
1. All contracts for the sale of real estate.
2. Contracts that are not to be performed for a year or more.
3. All contracts, to answer for the debt and obligations of
another, must be in writing.
If the contracting parties put but a part of their agreement in
writing the law will recognize only the written part. The whole
must be in writing, or the agreement will not hold.
Verbal contracts are not safe.
Although the law does not require even contract to be in writing,
yet, as it never declares that a contract must be verbal, it is
the part of prudence, wherever possible, to put every contract in
writing.
Owing to defects of memory even honest men may, and frequently do,
disagree as to the terms of a verbal contract.
Because the party with whom the contract is made is a close
friend, one is apt to depend on a verbal agreement, but the closer
the friend or relative, the more reason there is for an exact
written contract, if we would keep the friend.
FORMS OF CONTRACT
The law is never specific as to the form of contract that may be
used.
It is not necessary to draw up the contract with the formal
accuracy of a real estate deed.
Any one with good sense and a fair common school education can
draw up a contract that will hold.
Know what is required, then state the facts simply.
Contracts need not be sworn to or even witnessed.
KINDS OF CONTRACT
Every note, mortgage and other form of obligation is a specific
contract.
A lease is a form of contract between two people, known as
landlord and tenant, for the use of real estate for a period and
at a rental specified in the document.
A verbal lease may be made for a short period, but if for a year
or more, it must be in writing.
A lease should state when, where and to whom the rent is to be
paid.
Each party to a lease, or other form contract should have a copy.
If the premises rented should become unusable by fire or any
action of the elements the tenant is still liable for rent, unless
there is a special clause in the lease providing for such a
contingency.
A tenant cannot, without the written consent of the landlord, use
the rented premises for any other purpose than that stated in the
lease.
AS TO REPAIRS
In some states the law compels the landlord to keep the premises
in habitable repair, but this does not seem to be the rule. It
should be decided, where there is doubt, before signing the lease.
Where it is agreed that the landlord shall keep the premises in
repair, and, after due notice of the fact, he fails to do so, the
tenant may himself make the repairs and deduct the amount from the
rent.
SUBLETTING
If there is no contract to the contrary, the tenant may sublet the
whole or any part of the premises, but this does not release him
from liability for rent.
If the tenant fails to leave the property when his lease has
expired, the owner may make his demand through what is known as a
"notice to quit," which must be served on the tenant in person.
WHAT IS A GUARANTY?
A guaranty is sometimes required to insure the payment of rent.
Plainly, a guaranty is an agreement to assume, under certain
conditions, the liabilities of another.
If a man makes a contract, a lease, or a note, and his personal
resources are not deemed sufficient to secure his performance of
the things agreed to, the other may require that some one, in whom
he has more faith, shall give him a guaranty, or personal security
in writing.
The following might be used as the form for a guaranty for a
lease, contract, note or other obligation of contract:
"For value received, I hereby guarantee
the payment of the within lease (bond or
contract). George L. Roberts."
Short Hills, N. J.
October 1, 1910.
A BILL OF SALE
This is a written agreement by which one person transfers to
another his interest in certain personal property.
The law lays down no rule as to the form.
A bill of sale usually passes where the property paid for is not
immediately removed from the possession of the seller.
This form would answer in any state:
"Bridgeport, Conn., Aug. 2, 1910.
"I have this day sold to Calvin E. Platt,
of New Haven, in this state, my team of
bay horses, with their harness, one family
carriage, and a two-seated cutter.
"Thomas P. Fletcher."
Be sure, where the bill of sale includes many articles, to name
every one of them in the bill.
If paid for, whether by cash or a note, be sure to get a receipt
for the same.
OBLIGATIONS
A bond is a form of obligation.
Every enforcible bond must be in writing and under seal.
The maker of a bond by the act acknowledges a liability in the
form of a debt or a duty.
The maker of a bond is the "obligor."
The party to whom it is made is the "obligee."
The bond names the liability or indebtedness; then follows the
condition wherein it is stated the particular thing that the
obligor is to do, or not to do.
The penalty for the non-compliance with a bond is twice the amount
of the money involved.
It is often required that the bond shall be further guaranteed by
one or more sureties. These sureties may be required to certify
that they are worth a certain sum, free and clear of all
indebtedness.
Persons holding positions of financial trust, whether public or
private, may be, and most of them are, required to furnish bonds
for the faithful performance of their duties.
In the larger cities there are casualty and liability companies,
which, for a fixed or annual consideration, act as sponsors on
official and other forms of bond.
Where there are no such companies, as those just named, then
private citizens of known responsibility must be secured to go on
the bond.
In every case the amount of the bond or security is measured by
the responsibilities of the man from whom it is required.
CHAPTER XIX
LIFE INSURANCE
Life insurance may be defined to be "A contract for the future
payment of a certain sum of money to a person specified in the
body of the policy, on conditions dependent on the length of some
particular person's life."
There are two parties to this contract--the insured and the
insurer.
The purpose of the insurer, if he take out the policy in his own
name, is to provide in a measure for the care of his family, or
other dependents, in the event of his death.
After a long experience with the death rates in all lands that
keep mortuary statistics, the actuaries of insurance companies can
now estimate with surprising accuracy the probable length of life
before any man of any age.
The methods of insurance companies mean to be scientific, but be
that as it may, they are certainly interesting.
HOW IT IS DONE
Let us take a young man of thirty, married, with one child, in
good health, and in receipt of a fair salary, but with no property
to leave his wife and little one in the event of his death.
To secure his dear ones, he decides to insure his life for, let us
say, $3,000.
He fills out the blank, in which his age and all the other
required information is given; then the insurance company's doctor
examines him and he is accepted as what is called "a good risk."
Now, from its actuary tables, the company knows, with reasonable
accuracy, the number of years this young man should live, barring
accidents.
Already they have their tables of calculations for such cases.
They know what expense will be required in the way of rent,
clerks, advertising, etc., to care for this case till the
prospective, the inevitable end is reached.
On these calculations the immediate and all subsequent premiums or
payments are based.
The insurance company invests and reinvests the premiums, and the
total of these, it is estimated, will meet the expenses and the
amount of the policy at the time of its calculated expiration.
AS AN INVESTMENT
If the young man in question had the money, he would find it to
his advantage to buy a paid up policy, that is one on which no
further premiums would be required.
But, having the money for a paid up policy, could not the young
man, without any expense for clerk hire or rent, invest it, and
reinvest it with the interest, as long as he lived, and thus make
by insuring himself?
There can be no question as to that, provided always that the
young man lived out the calculated time, invested his insurance
money at once, and kept on investing it in "safe things" as long
as he lived. But how many young men are there who could or would
take this course?
It is much easier to save from our earnings than it is to invest
those earnings wisely.
FORMS OF LIFE INSURANCE
The straight life policy, payable to the heirs at death, is the
form in general use, but there are others.
There is yet another form, known as the "endowment," which in
itself combines the usual life insurance with some of the
privileges of a savings bank.
The endowment policy, while payable if death should occur before a
fixed time, specifies the date when it shall be payable to the
insured himself, if he should live till that time.
In this case the family is secured, in the event of death, and the
insured has a guarantee for himself when he reaches life's
unproductive years.
The premiums on an endowment policy are necessarily greater than
those on a regular life, and the premiums increase with the
shortness of the time.
MUTUAL INSURANCE SOCIETIES
Seeing the vast sums accumulated by what are known as "the old
line companies," despite their high salaries and great expenses,
working men throughout the world, but more particularly in the
United States, have banded together and formed mutual insurance
companies.
These companies, there are many of them, are known as societies,
and their local branches are called "lodges," "councils" or a
similar name.
Properly conducted, these mutual societies should be able to
furnish insurance at about actual cost, for the expenses of
management and collections are small.
It can be said that some of them have been and are being well
managed, but others, like their predecessors, the old line
companies, have unfortunately been conducted for the enrichment of
their promoters.
The mutual insurance companies, like their more pretentious
prototypes, are now placed under the supervision of inspectors in
nearly all the states.
AMOUNTS OF POLICIES
In the society companies, there is a limit to the amount, usually
$3,000, for which one can be insured, but the regular companies
have no such limitation.
In the mutual insurance companies, the insured cannot leave his
insurance to his creditors, or to any one not within a certain
degree of kinship.
In the regular companies a man may insure for any amount he thinks
he can carry, and he can insure in the same way in any number of
companies, and he can leave the money to any one he may select, or
for any purpose he may choose.
Sometimes the policy is made payable to unnamed executors. These
may be named in a will made after he has taken out his policy.
POLICIES AS SECURITY
Sometimes a man, without real estate or other personal assets,
desires to raise a loan on his life insurance, which, it should be
said, is a form of personal property. In this case he may assign
his life policy, or his endowment policy, as security for the
loan.
Again, if he is not insured and has no shadow of an asset, he may
have his life insured for the benefit of another, in consideration
for a loan.
LAPSES
When there is a failure to meet premiums, the policy is said to
"lapse" or default.
Even in this case the insured has an equity.
Every policy, depending on the amount paid, has what is known as a
"surrender value," and by proper process this may be collected
from the company.
In some states, if the insured fails to meet his premiums, the
company is compelled to pay on the policy at his death a sum
equivalent to that which he paid before default.
Some insurance policies have a clause stating that the contract
will be void in the event of the suicide of the holder. The
highest courts have set this clause aside. The ruling is that a
suicide is an insane man, and that his heirs should not be made to
suffer for his misfortune.
PROPRIETARY AND MUTUAL COMPANIES
The larger insurance companies may be either proprietary or
mutual, some are a combination of both.
The proprietary companies are corporations organized by a number
of men to conduct life insurance as a business enterprise.
Such a company must be regularly chartered, and is under the
supervision of the state department of insurance.
Mutual companies, as the name implies, are organized and are meant
to be managed for the benefit of the policy holders, who are also
regarded as stock holders, with the right to vote in the election
of officers and other company affairs.
Aiming to create a strong reserve fund to secure the policy
holders, the mutual life insurance companies usually charge a
little more in the way of premiums.
Many rich men have their lives insured for great amounts. This is
done that their heirs may not be forced to break up the estate, at
death, in order to settle the ordinary liabilities.
If it can be afforded, it is always well to carry some life
insurance.
CHAPTER XX
FIRE AND ACCIDENT INSURANCE
We hear and know much about life insurance because, no doubt, it
has to do directly with the individual, and so has a personal
appeal; but there are other forms of insurance, forms that have to
do with things material, that play an important part in the
world's business.
LIKE GAMBLING
The gambling spirit, like the desire for stimulants and the
tobacco habit, seems to be well nigh universal.
Men bet on the turn of dice, the cutting of cards, or the tossing
of a coin, and we very properly denounce it as gambling. We take
money without giving an equivalent, or we part with it and have
nothing to show for the transfer.
There are insurance companies in England and in other parts of
Europe where they insure risks from life to fire, from ships to
crops, and from the turning of a card to the tossing of a coin.
The English company, known the world over as "Lloyd's," is ready
to insure an ocean liner, or to guarantee that the next child born
into your family will be a boy or a girl; it will even insure that
there will or will not be twins, and that, if twins, they will be
boys or girls, or one of each.
Now, this looks like gambling, and you would be quite right in so
classing it, yet it is founded on the well considered law of
chance, and the premiums--call them bets--are calculated with a
mathematical precision surprising to one who has not studied the
matter.
WHAT IS FIRE INSURANCE?
Fire insurance is a contract between the insured and the company
taking the risk, in which for a consideration called a "premium,"
the company agrees to pay to the insured a stated sum, should the
property, named in the policy, be destroyed by fire.
If there should be a fire, during the life of the policy, and the
damage is not total, the company pays only enough to cover the
loss.
Should the property be totally destroyed the company pays up to
the amount named in the policy.
No company cares to insure for the full amount of the property;
that might be an incentive to incendiarism.
In taking a fire risk, the companies base their estimates on
tables as carefully worked out and from experiences quite as well
studied as those of the actuaries of life companies.
Fire companies are purely business corporations, and their conduct
is subject to the inspection of the officials of the state from
which they receive their charters.
PREMIUMS
As life companies have rates dependent on the age of the insured,
so fire companies regulate their premiums by the location and
other circumstances of the buildings; in other words, they
calculate the probabilities, and charge accordingly.
There are buildings particularly subject to combustion on which
American companies will not take a risk. Among these may be
classed kerosene and turpentine stills, sulphur and powder mills,
and the buildings in which these products are stored.
Buildings not used for the purposes named, but in close proximity
to them, are often considered too dangerous to warrant the
issuance of a policy.
In all cases, the company makes a careful survey of the property
to be insured, and on this report the amount of the premium is
based.
Premiums on fire policies must be paid in bulk and in advance.
Policies should be renewed some days before the expiration of the
old ones.
Fire premiums, taking into consideration the amount to be paid,
are much lower than life premiums. We know that a man must die,
but a building may never burn down, therefore the risk is less.
COLLECTING
A man may insure in a dozen life insurance companies, and each
must pay the amount of the policy on his death, but not so with
fire companies.
A man owning a house worth, say ten thousand dollars, can insure
it in ten companies, each taking a risk of eight thousand dollars.
If this house burns down the man does not receive eighty thousand
dollars. The actual loss is calculated and the companies divide it
up, each paying its part.
Fire companies, while anxious to issue policies on every insurable
house, are more than willing that their business rivals should do
the same, as in the event of fire the burden of loss will not be
borne by one.
After every fire the company's agent examines the damage and
estimates what is saved. On this the payment is based.
INSURABLE PROPERTY
A building is classed as real estate, but personal property is
just as liable to be destroyed by fire.
Fire policies can be secured on goods, furniture, machinery, live
stock and other things, and the method is about the same as where
buildings are insured, but as a rule the premiums are higher, for
such things are apt to be ruined by smoke and water, when the
building in which they are stored may not be much injured.
MUTUAL COMPANIES
Men can associate for any legal purpose, and mutual protection
against loss by fire is one of these.
In many neighborhoods throughout the country, but particularly in
the eastern states, there are mutual insurance companies, usually
composed of a number of men who know each other and who agree to
share the losses of a member, in proportions agreed to in advance.
This form of insurance is cheap and effective, but the field of
its operations is necessarily limited.
STOCK COMPANIES
The stock companies start with a fixed capital, each member
receiving stock in proportion to the amount contributed.
The capital and the interest from it, after paying the necessary
expenses, is invested, and reinvested, till it often reaches a
large sum.
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